DISCLAIMERS€¦ · THE DIGITAL CURRENCY REVOLUTION . 2014 BITCOIN YEAR IN REVIEW International...

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Transcript of DISCLAIMERS€¦ · THE DIGITAL CURRENCY REVOLUTION . 2014 BITCOIN YEAR IN REVIEW International...

Page 1: DISCLAIMERS€¦ · THE DIGITAL CURRENCY REVOLUTION . 2014 BITCOIN YEAR IN REVIEW International Corporations accepting Bitcoin Payments Electronics Travel Gaming Charity. BOARD &
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DISCLAIMERS

This presentation contains summary information about Digital CC Limited (“Digital CC”) and is current as at February 28, 2015. The information in this presentation is of general background and does not purport to be complete. It should be read in conjunction with Digital CC’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, which are available at www.asx.com.au. This presentation is not investment or financial product advice (nor tax, accounting or legal advice) and is not intended to be used for the basis of making an investment decision. Investors should obtain their own advice before making any investment decision. Digital CC has prepared this document based on information available to it at the time of preparation. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, Digital CC, its related bodies corporate (as that term is defined in the Corporations Act) and the officers, directors, employees, advisers and agents of those entities do not accept any responsibility or liability including, without limitation, any liability arising from fault or negligence on the part of any person, for any loss arising from the use of the presentation or its contents or otherwise arising in connection with it.

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OVERVIEW

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THE DIGITAL CURRENCY REVOLUTION

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2014 BITCOIN YEAR IN REVIEW

International Corporations accepting Bitcoin

Payments Electronics Travel Gaming Charity

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BOARD & MANAGEMENT

Zhenya Tsvetnenko

Executive Chairman

Mr. Tsvetnenko is a highly successful businessman in the sectors of mobile messaging and internet advertising. He is a highly successful entrepreneur and is also the founder of Mpire Media, a privately held global multimedia and online advertising company servicing international clientele. Awarded the prestigious Ernst and Young, Entrepreneur of the Year 2010 award in Australia (young category) and the Western Australian Business News 40 under 40 award in 2011.

Alex Karis

Chief Executive Officer

Mr. Karis is President and founder of Karis Marketing Group, one of the leading US digital marketing companies, providing online marketing support services to major US Telecom carriers. Mr. Karis has over 10 years experience in the online display and mobile content space, managing projects for clients such as Bank of New York Mellon, Martha Stewart Living and AT&T. Holds a bachelor degree in Marketing at The University of Massachusetts Amherst.

William Brindise

Chief Investment Officer

Mr. Brindise has over 15 years experience in trading energy, metal and grain options and futures. He started his career on the NYMEX working for ZAR trading and after few years started his own trading and brokerage company, BAK. After 4 successful years he moved off the floor when NYMEX trading became digital and took a job working for the hedge fund SHK Management. He managed $20 million and returned an annualized rate of 60% on that money. Mr. Brindise will continue to oversea proprietary trading desk operations and is now focusing on trading Bitcoins at digitalBTC. He holds a bachelor degree in Business and Finance from the Boston University.

Brett Mitchell

Non Executive Director

Mr Mitchell is a corporate finance executive with over 20 years of experience in the finance and resources industries, and has been involved in the founding, financing and management of both private and publicly-listed resource companies. Mr Mitchell holds a Bachelor of Economics from the University of Western Australia and is a member of the Australian Institute of Company Directors (AICD) and will be involved with the corporate strategy of the business in his new role as a Director.

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OUR BUSINESS

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FINANCIAL RESULTS

Financial Performance for the six months ended 31 December 2014:

Total revenue of $14.5 million: Liquidity Desk and digitalX Direct sales of $9.9 million Bitcoin transaction verification revenue of $4.6 million

EBITDA of $216,9341

Net increase in cash and equivalents of $251,373 Underlying Net Loss After Tax of $2.3 million due primarily to non-cash accounting adjustments to the fair value of bitcoin inventory and performance rights and depreciation

Note 1: For a reconciliation of EBITDA to NLAT refer to the Financial report for the half year ended 31 December 2014 – released to ASX on 27 February 2015.

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DEVELOPMENT STRATEGY

digitalBTC Products

Competing Products

on the Market

Easy to Use

Functional

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PRODUCTS AND SERVICES

• Pocket is a mobile application that makes financial transactions simple and more secure.

• Allows the instant transfer and settlement of funds anywhere in the world, at anytime

• Leverages the benefits of digital currencies

• A platform to take advantage of the innovations in the digital currency space such as the Blockchain technology

• Launch of product (beta) in 1H 2015 with over 35,000 pre-enrolments since 1 November 2014

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PRODUCTS AND SERVICES

• Software that provides Bitcoin liquidity to market participants

• digitalX Direct liquidates our Bitcoin inventory at a premium to the market rate

• In Beta test with select customers showing significant trading growth

• $1.2 million turnover in first three months

• Perfect platform for high frequency electronic trading in digital currencies

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PRODUCTS AND SERVICES

• 50%/50% joint venture with one of world’s biggest digital currency exchanges – Cryptsy.com • Allows customers to lease large scale specialised computing power used to verify a range of digital currency

transactions – a process called “mining”. • Customers are able to use the computing power to develop new digital currencies and associated technologies

and earn digital currencies through the utilisation of the computing power • Prior to launch, Mintsy has already had 30,000 consumers pre-enrol into memberships • Cryptsy will actively market Mintsy’s services to its vast member base of 250,000

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PRODUCTS AND SERVICES

Bitcoin Transaction Verification

• Bitcoin transaction verification is a process by which the Bitcoin ecosystem maintains its integrity in a decentralised network (this process I also called Bitcoin Mining)

• Fees generated by the issue of new Bitcoins from the Bitcoin network

• $4.6 million revenue generated for the 6 months ended 31 December 2014

• Total capital invested - ~$6 million

• digitalBTC has 1.5% market share of the Bitcoin transaction verification market.

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FUTURE TECHNOLOGIES

Advanced Remittance services

Peer-to-peer Lending

Smart Digital Assets

digitalBTC continues to develop software products and features that compliment its current technology foundation.

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COMPANY STRATEGY

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D I G I TA L C U R R E N C Y I N V E S T M E N T L A N D S C A P E

• Bitcoin went “mainstream” approximately 12 months ago

• ~US$470 million total VC investment in digital currency start-ups to 24 October

• Major merchants now accepting bitcoin– Microsoft, Dell, Expedia, Dish Network etc.

• Price quoted on Bloomberg, Yahoo Finance, Google Finance

• Global regulation emerging in stages

‒ Recognised in Australia as personal property

‒ General rules for property transactions apply in USA

‒ United Kingdom particularly pro digital currencies.

*http://www.coindesk.com/bitcoin-venture-capital/

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2014 BITCOIN YEAR IN REVIEW

Bitcoin Venture Capital

2013 vs. 2014

2013 96 Million

2014 380 Million 396% Increase2

Venture Capital Top 4 Biggest VC Deals of 2014 & 20152

40 Million USD

30.5 Million USD

30 Million USD

80 Mil 70 Mil 60 Mil 50 Mil 40 Mil 30 Mil 20 Mil 10 Mil

Venture Capital by Industry Area120143

Universal Exchange Payment P r o c e s

s o r

Mining Financial S e r v i c e

s

Wallets

40.5

25.4

All values in Millions of

USD 24

26.7

3.2

49.7

12.1

69.5

15

75.4

11

88.1

1. Source: Coindesk “State of Bitcoin 2015” 2. Source:BitPay

75 Million USD

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SIGNIFICANT BACKERS

Who Is Supporting Digital Currencies in Changing The World?

More money has been invested to date in Digital Currencies technology than the internet in early 1990’s

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CORPORATE SUMMARY

Substantial Shareholders

Zhenya Tsvetnenko (Executive Chairman) 25.3%

Alex Karis (CEO) 12.2%

William Brindise (Executive Director) 7.5%

Peernova (Technology IQ) 7.4%

Rod Jones and associates 9.3%

Craig Burton and associates 6.6%

1. The separate classes of Options are as follows: (a) 3,849,517 options exercisable at $0.286 on or before 30 June 2017; and (b) 8,316,710 options exercisable at $0.28 on or before 5 June 2016.

2. Enterprise Value calculated as market capitalisation less cash and coins balance

Capital Structure

Current Shares on Issue 168,772,977

Options (2016) 1 12,166,227

Market Cap @ A$0.10 cps A$16.8 million / US$13.1 million

Cash and coins at 27 February 2015 A$5.1 million/ US$4.0 million

Enterprise Value 2 A$11.7 million / US$9.1 million

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WHAT ARE DIGITAL CURRENCIES?

As a Digital Currency, Bitcoin is both a medium of exchange and more importantly a revolutionary payments system

Allows transfer of value from one user to another without an intermediary

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BITCOIN OVERVIEW

How does Bitcoin Work?

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DISRUPTIVE TECHNOLOGY The most disruptive part of Bitcoin is Peer to Peer payments

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2014 BITCOIN YEAR IN REVIEW

Top 5 Countries Where Bitcoin is Used1

United States

United Kingdom

Canada

Germany

Netherlands

Bitcoin Trading Volume

2013 vs. 2014

2013 15 Billion USD

2014 23 Billion USD 57% Increase1

Bitcoin Wallets

2013 vs. 2014

2013 3.19 million active wallets

2014 7.95 million active wallets 149% Increase1

1. Source: Coindesk “State of Bitcoin 2015”

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0

20,000

40,000

60,000

80,000

100,000

120,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Merchants Accepting Bitcoin

2014 BITCOIN YEAR IN REVIEW

100,000 Merchants Worldwide

During December 2014, we reached the milestone of 100,000 merchants accepting Bitcoin

1 2

1. Source: Coindesk “State of Bitcoin 2015” 2. Source:BitPay

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CASE STUDY - REMITTANCES

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AUSTRAL IAN REGULATORY ENVIRONMENT

Australian Taxation

Office (ATO)

• ATO currently recognizes Bitcoins (and other digital currencies) as personal property, subject to CGT

• These rules were introduced in August 2014

• There is an existing personal use exemption in GST code for purchases with Bitcoins under $10k

• Further discussions underway to amend the GST act to treat Bitcoin as currency for GST purposes

Industry Body

• digitalBTC is a founding member of the Australian Digital Currency Commerce Association (ADCCA), which advocates for a supportive regulatory environment • We have met with numerous stakeholders – ATO, regulators, and political office

holders • Ultimate objective of having Bitcoin classed as “money” for GST and other

purposes • Can be accomplished with minimal legislative changes – definition only

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RISKS

Company Specific

There are a number of specific risks involved for the Company, and consequently its shareholders. These include risks specific to the business and assets of Digital CC, which include the following non-exhaustive list. • The Company’s ability to operate in the future will depend in part on whether it is able to effectively commercialise its

potential interests in digital currency and digital currency products. This will depend on successful completion of product development activities, obtaining regulatory approvals and on there being commercial demand for such products which cannot be guaranteed;

• The Directors make no forecast of whether the Company will ever be profitable; • intellectual property risks as discussed below; and • additional capital may be required in order to undertake further development activities for the Digital CC business and

there is no guarantee that the Company will be able to fund ongoing development.

Market Risks

Share market conditions may affect the value of the Company’s quoted Securities regardless of the Company’s operating performance.

Key Person Risk

The responsibility of overseeing the day-to-day operations and the strategic management of the Company and Digital CC depends substantially on senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company and Digital CC if one or more of these employees cease their employment or if one or more of the Proposed Directors leaves the Board.

Regulatory Risks

Digital currencies involve relatively new technology which has been identified as possibly posing risks in relation to law enforcement and government regulation. It is likely that governments worldwide, including Australia, will continue to explore the benefits, risks, regulations, security and applications of digital currencies, such as Bitcoin.

Technology Risks

Securing rights to technologies, and in particular intellectual property, through licensing or otherwise, is an integral part of securing potential product value in the outcomes of digital currency. Competition in retaining and sustaining protection of technologies and the complex nature of technologies can lead to expensive and lengthy disputes for which there can be no guaranteed outcome.

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COMPANY CONTACTS

For further information please contact:

Zhenya Tsvetnenko Executive Chairman Tel: +61 8 9473 2525 Email: [email protected]

Alex Karis Chief Executive Officer Tel: +1 (617) 544 3150 (x) 1010 Email: [email protected]

For media request please contact:

Shane Murphy, FTI Consulting Direct: +61 8 9485 8804 Mobile: +61 420 945 291 Email: [email protected]

MA, United States 25 Recreation Park Drive, Suite 108 Hingham, MA 02043

NJ, United States 788 Shrewsbury Avenue, Suite 2200 Tinton Falls, NJ 07724

WA, Australia Suite 11, 16 Brodie Hall Drive Technology Park Bentley, WA 6102